Outsourcing Payroll Can Simplify Your World

Payroll is hard. Regulations governing payroll and human resources evolve too quickly for average accounting teams to adapt to. Multi-View recommends that Hospice organizations focus on Model principles like high-quality, predictable experiences for patients and strong financials. The urgency of payroll reduces attention to those principles and can increase indirect costs.

If you’re considering outsourcing your payroll and/or human resources, here’s what you need to think about.

• Are you confident that your Federal, State, and Local taxes are being calculated correctly and deposited on time and correctly?
• Is all your IRS paperwork getting filed properly? Were your W2s correct and submitted on time? Have you ever been a pay day late because “the bank messed up your electronic transfer?”
• Are you sure the way you handle all employee-related matters are legal? Do you have any assessments in place at all to identify weak or improper employee processes and the risks associated with them?
• Are your rewards and recognition systems consistent with company goals and getting the most from your employees?
• Do you have the trained resources to verify your PR and HR information? Does your staff have the expertise to administer PR and HR? If you are a small to medium business you may find that the major payroll processing companies offer options for cost effective training for your employees.

Small to medium Hospices spend large amounts of time dealing with employee-related processes and the associated paperwork. A solution that some Hospices have begun looking at is HR and PR outsourcing. (Usually PR comes first.) Outsourcing comes at differing levels. It may involve contracting many or all of your HR/PR tasks to a company or companies that specializes in providing this kind of support to other businesses. 

As with any business decision, there are pros and cons to payroll outsourcing, but one immediate benefit is relief from much of the paperwork and reduction (not elimination) of the need for expertise in these two areas. This can save a Hospice time and money. Our current economic climate is forcing Hospices to find creative ways to remain competitive. Outsourcing of certain business functions is increasingly popular to let key Hospice staff offload necessary but peripheral duties and focus on core services.

Advantages of Outsourcing

• Effective use of outside sources who are experts in their area, and who keep abreast of all the latest developments. This is especially important with HR and in the realm of tax regulations.
• The avoidance/elimination of IRS and State penalties.
• 401k/403b administration can be a nightmare
• Utilization of current, integrated technology instead of a “where’s that spreadsheet?” approach.
• Improving compliance with HR regulations and reduction of employer risk.
• Overcoming the lack of expertise in-house.
• Offering employee services that otherwise might be overlooked and getting expert advice on best practices for employee management and benefits administration.
• Giving employees greater accessibility to HR experts to get prompt, accurate answers to their questions.
• A strong likelihood of cost savings and a quantum leap in the overall quality in these two areas.

Disadvantages of Outsourcing

• Outsourcing does not relieve you of the need for some payroll knowledge. There has to be a supervisory function in house to keep the outsourcers on track. The outsourced vendor must understand all the rules, policies, and procedures of the Hospice so the process does not go awry.
• The Hospice is ultimately liable for the deposit and payment of federal tax liabilities.
• Reporting will not always be to your exact taste. Don’t expect every report you want in the exact format you’d like it. 80% is a good rule of thumb here, and outsourced reports that import into Excel are things of beauty.
• An increase in costs at start-up, especially if your Hospice had a minimal HR function operating at the time of outsourcing.
• The multiple processing centers typical of major, national outsourcing firms can lead to varying satisfaction levels depending on which processing center you get.
• Less PR flexibility. PR Outsourcing companies have deadlines for processing payroll information, which require discipline on the part of staff so deadlines will be met. Payroll processors are unforgiving; you’ll only miss one deadline.

Summary

Understand that the larger outsourcing firms offer integrated software solutions for PR, HR and Time-keeping, along with a much larger technical staff to maintain the software than your Hospice could ever afford. This means, potentially, one-stop shopping for the Hospice and typically a much easier course to navigate during major software enhancements or changes within HR/PR functions. An outsourcing firm normally assigns an Account Representative who is responsible for servicing your Hospice account. The Account Representative is responsible for making sure software changes are managed smoothly. 

Outsourcing is not a decision that should be rushed into. You need to do your homework. Call the outsourcing vendors and request demonstrations. Before the demonstration make sure to complete a list of questions and items that you feel are deal breakers. Read reviews. Before proceeding make sure you have a clear idea of the expectations for the outsourcing company and your local payroll staff. The main goal is to arrive at a solution that improves the compliance/quality of these functions at your Hospice and saves money at the same time.

Resources

This section comes with the standard disclaimer that Multi-View makes no recommendations, express or implied about the vendors mentioned below. That said, here are some major players in the HR and PR outsourcing arena along with ideas and links:

CYMA Payroll Processing (www.cyma.com) offers outsourced payroll processing. The advantage of CYMA payroll processing is that it seamlessly integrates with your other CYMA modules.
Automatic Data Processing, Inc (www.adp.com) offers a whole raft of PR and HR related services. It is used by a number of Multi-View clients.

Ceridian Corporation (www.ceridian.com) is another large, international firm that offers a full suite of products and services in the HR/PR arena. It is also used by a number of Multi-View clients.
Local HR/PR Firms: Investigate local and regional HR/PR outsourcing firms. They might not be as high-powered as the nationals, but they may relate better to the home-town crowd and offer competitive pricing. In other words, don’t overbuy.

Membership in the American Payroll Association  (www.americanpayroll.org) is a Must for Payroll Managers, Administrators and Clerical staff.  This organization provides monthly publications containing the most current compliance information, training courses, and informational conferences.  Through training and testing, members may become Certified Payroll Professionals which allows them to become leaders within their organizations.       

Finally, the Society for Human Resource Management (www.shrm.org) is an organization well-worth the yearly fee ($180) for its wealth of articles, resources, and documents in the HR field. Browse the site for a bit and you’ll see what we mean.

The Internal Revenue Service (www.irs.gov) is the source for all things tax related. Downside is that Uncle Sugar’s site is hard to navigate and harder still to understand once you find what you’re looking for.